Too big to fail is the problem...
ANY business that has put itself in a precarious situation should be forced/allowed to fail on it's own.The Tarp Crisis was a scam,manufactured by Bankers,Fannie Mae and others .The sky wasn't falling. The policies ,such as the "Affordable Housing Act" caused the snowball to roll...
wheel,
wheelrite wrote:
Too big to fail was a result of the derivitive market not being regulated, open or monitored.
And, once again, poor people did NOT cause this crisis, CRA did not cause this crisis, simply not true. I know Hannity, Beck and Limbaugh keep saying it, but it's still not true.
Full Report:
http://cybercemetery.unt.edu/archive/fcic/20110310172443/http://fcic.gov/ http://www.lexisnexis.com/community/realestatelaw/blogs/troubledloans/archive/2011/02/14/finally-financial-crisis-explained-in-government-report-issued-january-27-2011-analyzing-factors-in-crisis-including-housing.aspx Attempt to Solve Redlining - with CRA -- Was Not the Problem
The panel specifically addressed the Community Reinvestment Act (CRA) and concluded that the CRA was not a significant factor in subprime lending or the crisis. The CRA, which was enacted in 1977, sought to address redlining whereby banks denied credit to individuals and businesses in certain neighborhoods without regard to the applicants' creditworthiness. The panel noted that many subprime lenders were not subject to the CRA and that only 6% of high-cost loans (a proxy for subprime loans) had any connection to the CRA. Chapter 5, titled "Subprime Lending," cites to a 1997 study that indicated that loans made under the CRA performed consistently with the rest of the banks' portfolios, suggesting that CRA lending was not riskier than other lending.
This financial crisis was avoidable.
Widespread failures in financial regulation and supervision proved devastating to the stability of the nation's financial markets.
Dramatic failures of corporate governance and risk management at many systemically important financial institutions were a key cause of this crisis.
A combination of excessive borrowing, risky investments, and lack of transparency put the financial system on collision course with crisis.
The government was ill prepared for the crisis, and its inconsistent response added to the uncertainty and panic in the financial markets.
There was a systemic breakdown in accountability and ethics.
Collapsing mortgage-lending standards and the mortgage securitization pipeline lit and spread the flame of contagion and crisis.
Over-the-counter derivatives contributed significantly to this crisis.
Failures of the credit rating agencies were essential cogs in the wheel of financial destruction.
